Transportation in Supply Chain
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Business exist to satisfy a need and remain competitive which is achieved by either resource perspective or market perspectives (Williamson et al, 2011). Distributing goods to ensure timely delivery to customers is a key strategy which makes customers loyal as they trust product availability. To optimize distribution in supply chain, a balance in efficiency against responsiveness with maximum customer satisfaction must be achieved. The distribution of goods and services can be achieved through so many transport systems like rail, water, sea, air, road, Information technology, internet etc. Since businesses exist to make profit, they constantly seek for ways to reduce cost and increase revenue and profitability. This makes business to constantly device techniques and process on how to achieve efficiency at the lowest cost. (Ross 2004)
Creating solution for transportation should be integrated into the wider supply chain aspects and effective management of the transport systems makes a business to be an order winner and not order-takers which are companies that are not able to obtain goods and services for a competitive prices thus not benefiting from competitions in transport market. ( Holter et al, n,d). For manufacturing companies, transportation is a key logistics component in customer satisfaction as goods produced are meaningless if they did not get to the final consumers.
Raw materials sourced offshore involve transportation by rail and air for goods sourced offshore and lorries are used for local transportation by road for goods sourced locally and also for delivering the raw materials from the ports to the factory. Also, 80% of customers are national and majority are 500km or more from manufacturing centers. The following option would be explored to ensure efficiency in delivery at the lowest cost.
Entering into partnership with suppliers and Customers: Company is a medium sized company and its own transport network would be too expensive for the company. Developing transport network involves the collection of transport modes, locations and routes along which products are shipped. ( Chopra and Meindl 2013). The companys 80% customers are national and situated in 500km or more, this means that about 80% of the customers generate a greater percentage of the income generated. This income would be enhanced by developing a partnership system with the suppliers and customers that ensures that raw materials get to the factory on time and finishes products get to customer on time with effective inventory management which is a competitive advantage for the company.
Achieving effective distribution involves reducing cost through transportation, less inventory and improved customer satisfaction which reduces the administration and enables management focus on more value adding activities (Holter et al. n.d) and transport resources is accessed in identifying the basic requirement needed and maximizing their utilization